Small-cap stocks in the Russell 2000 (^RUT) can be a goldmine for investors looking beyond the usual large-cap names. But with less stability and fewer resources than their bigger counterparts, these companies face steeper challenges in scaling their businesses.
The high-risk, high-reward nature of the Russell 2000 makes stock selection critical, and we’re here to guide you toward the right ones. That said, here are two Russell 2000 stocks that could be the next breakout winners and one that may face some trouble.
One Stock to Sell:
Camping World (CWH)
Market Cap: $487.8 million
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE: CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Why Is CWH Risky?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Sales were less profitable over the last three years as its earnings per share fell by 73.3% annually, worse than its revenue declines
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Camping World is trading at $7.68 per share, or 10.1x forward P/E. Read our free research report to see why you should think twice about including CWH in your portfolio.
Two Stocks to Watch:
Zeta Global (ZETA)
Market Cap: $4.90 billion
Powered by an AI engine that processes over one trillion consumer signals monthly, Zeta Global (NYSE: ZETA) operates a data-driven cloud platform that helps companies target, connect, and engage with consumers through personalized marketing across channels like email, social media, and video.
Why Are We Fans of ZETA?
- Winning new contracts that can potentially increase in value as its billings growth has averaged 36.6% over the last year
- Market share will likely rise over the next 12 months as its expected revenue growth of 29.1% is robust
Zeta Global’s stock price of $19.80 implies a valuation ratio of 2.4x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Sezzle (SEZL)
Market Cap: $3.70 billion
Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ: SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.
Why Are We Bullish on SEZL?
- Market share has increased this cycle as its 67.4% annual revenue growth over the last two years was exceptional
- Earnings per share have massively outperformed its peers over the last one years, increasing by 65% annually
At $110 per share, Sezzle trades at 19x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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